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Why the Polar Vortex is creating a fuel crisis

At last we have found a use for copies of “Kardashian Konfidential,” that classic of western literature “written” by Kim, Kourtney and Kloe.

We can burn them to stay warm when we run out of fuel in the next few weeks.

This sounds like a Simpsons spoof of the disaster movie “The Day After Tomorrow,” but it may be no joke.

U. S.heating fuel reserves have plunged to “critically low levels” as a result of the brutal, bitter winter, Bank of America Merrill Lynch has warned its clients in a new report. “U.S. distillate stocks are now officially at one of the lowest seasonal levels ever,” says Bank of America’s
BAC, -0.84%
energy team, adding that the shortages extend across the Atlantic as well.

The disturbing news comes even as the Polar Vortex barrels down upon us yet again. Weather forecasters warn of yet another brutal wave of snow, ice and horrific below-freezing temperatures on the way; temperatures have already plunged in the upper Midwest.

In “The Day After Tomorrow,” desperate weather refugees ended up burning books for fuel in the New York Public Library. One character fought to defend classics such as a Gutenberg Bible, symbols of western civilization’s greatness. “Kardashian Konfidential?” Hmmm.

(In a further sign of cultural degeneration, the main building of the New York library, where the movie’s final scenes were set, has since been named after Stephen Schwarzman, the private equity tycoon who once compared proposals to close his industry’s tax loophole to “Hitler invading Poland.”)

The U.S. has already seen fuel shortages in some regions this winter. There are fears these could become much worse. Analysts estimate prices would have continued to surge even if we were hit by an early spring. And that is not on the menu.

In the financial markets, the price of fuel for delivery “now” has surged way above the price of fuel for delivery three months down the road, a scenario known as “backwardation.” In a further sign of stress, analysts say the gap between the two is now at its highest level in 10 years — in other words, since the fuel market alarm just before the invasion of Iraq.

To put this in layman’s terms: People can let you have all the fuel you want if you’re willing to wait until May. But if you want fuel now…well, that’s another matter.

Bank of America estimates that the bitter winter so far has boosted demand for fuel distillates in the northeast by 150,000 barrels a day — a remarkable amount. As a result, the shortage has come even though we are importing more oil than ever before, and producing more oil than ever before.

Do you need to stockpile fuel? I don’t want to alarm anyone. But prices may surge further. We may be wearing our polar fleeces indoors if things get any worse.

Meanwhile, I note, once again, how good it is to be the energy business. No matter how much we find new sources of fuel and new energy savings, I’ve never met a poor oil company executive. We should probably all have a chunk of our portfolio in energy stocks, if only so we can make back a little in our IRA when we get hosed on our fuel bills. The iShares Global Energy exchange-traded fund
IXC, -1.11%
, which owns a broad basket of them, is the simplest one-stop shop. It has a dividend yield of 2.65%, even after expenses of 0.48%.

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